The Syrian Cataclysm

For obvious reasons, coverage of the uprising and internal war in Syria has been dominated by the terrible human toll. An estimated 60,000 Syrians (or more) have been killed, with tens of thousands more scarred bodily and emotionally by the violence. As of the end of February, over 3 million Syrians are either internally displaced or refugees in neighboring countries.

In retrospect, it appears that the UN High Commissioner for Refugees, along with many other observers, did not understand the extent of the crisis, saying in March 2012 that only 96,500 refugees in Jordan, Lebanon, Turkey and Iraq would need humanitarian assistance through the end of that year. The donor pledges of $1.5 billion in late January are therefore also likely to fall short of the funds that will be necessary. The World Food Program has admitted that it is unable to feed over 1 million hungry people inside Syria. The levels of destruction are not just staggering -- they are a moving target. Estimates are obsolete soon after they are compiled.

And there is cause for alarm beyond the immediate humanitarian emergency, namely, the severe damage to the Syrian economy in the short and the long term. Many of the refugees and internally displaced doubtless fear for their lives, but another reason for their mass flight is the loss of livelihood resulting from the destruction of entire villages and cities and the devastation of physical infrastructure and agricultural lands.

As the International Crisis Group points out, the economy has deteriorated further and further with each escalation of the crackdown on the uprising, as the government moved from mass arrest, torture and targeted shooting of demonstrators to the “security solution” or collective punishment of cities, and, finally, to the “military solution,” the bombing and shelling of areas hosting armed rebels. The systematic and wholesale destruction of entire towns and cities has led to accusations of crimes against humanity by the Syrian regime. As the turn to militarization continued, however, the UN also documented war crimes and human rights abuses by several rebel groups.

It is clear, in any case, that Syria will be paying the socio-economic costs of its internal war long after the guns fall silent.

There have been steep declines in production, investment and trade. Agricultural output is also way down, including of wheat, barley, and fruits and vegetables. Here the fighting has compounded the ill effects of the serious drought that has afflicted Syria since 2003. (The social cost of the drought and its role in the grievances leading to the uprising has yet to be fully studied. A first attempt is here. A more scholarly assessment of how water shortage is manufactured by government policies is here.) Wheat yields, long a major source of food security, have shrunken over the last several years by 30-50 percent and in 2012 were estimated to disappoint the already low expectations by 40 percent. The livestock and poultry sectors have suffered badly, according to a June 2012 UN Food and Agriculture Organization report, fueling a rise in the prices of meat, milk, chicken and eggs by as much as 300 percent in some areas. The FAO concluded then that the “household-level food security of about 30 percent of the rural population,” not to mention the families of internally displaced now living in and around the cities, was perilously compromised. All told, the UN agency said, about 3 million people required urgent assistance to put enough food on the table.

The Syrian government response at the outbreak of the uprising -- raising public-sector salaries -- was neither sustainable nor adequate. Economic liberalization since the mid-2000s had increased poverty, inequality and marginalization, and eroded traditional social bases of support, particularly in the countryside. The corruption resulting from the alliance between the holders of wealth and power had resulted in the enrichment of a narrow group of powerful businessmen and their partners in the army and security forces. Rather than undertaking large-scale investment that would benefit Syrians across the board, the regime sought to target its presumed bases of loyalty among civil servants, workers in state-owned enterprises and the government bureaucracy at large. That half-measure, coupled with the regime’s unwillingness or inability to discipline the main objects of popular loathing, such as the president’s cousin Rami Makhlouf, indicated that the regime had gone immediately into survival mode rather than seriously addressing the underlying grievances of the uprising.

A report released in late January by a group of economists working inside Syria with the Syrian Center for Policy Research (SCPR) examines both the economic roots of the uprising and its consequences. (Full disclosure: I assisted in editing a portion of the report.) The economists claim that economic losses through 2012 are some $48.4 billion, half of which are due to losses in GDP and half of which are due to declines in capital stock and military spending. The report estimates a decline in the Syrian Human Development Index (a compendium of social indicators including measures of income, education and health) to its 1993 level, or a 20-year loss of human development.

As the regime proceeded with its brutal crackdown, there were frantic calls for economic sanctions. These came not only from the usual suspects, like the US and European governments, but also from the Arab League and activists inside Syria who were horrified by the violence inflicted upon the protest movement. Though the precise impact of sanctions is hard to disentangle from the overall economic disruption, it is clear that they have not achieved their goal of isolating and punishing the regime. On the contrary, they have exacerbated the economic crisis and increased the toll on Syrian society.

Economic sanctions on Syria did not start with the 2011 uprising. The United States maintains three types of sanctions against Syria. The Syria Accountability Act of 2003 prohibits export to Syria of most goods that contain more than 10 percent US-made components. In 2006, the Bush administration blocked US banks and subsidiaries from doing business with Commercial Bank of Syria, which was labeled as a “financial institution of primary money laundering concern” pursuant to provisions in the PATRIOT Act. Finally, through a series of eight executive orders, Presidents George W. Bush and Barack Obama have imposed progressively tighter sanctions on Syrian companies and nationals, for reasons ranging from support for Saddam Hussein’s regime (Executive Order 13315) to “benefiting from public corruption.” Executive Order 13572, signed by Obama on April 29, 2011, bars dealings with individuals and entities accused of complicity in human rights abuses during the uprising.

The real blow to the Syrian economy, however, has been struck by the European Union’s sanctions. According to the EU Commission, Brussels has levied 17 sets of “restrictive measures” against Syrian nationals, government entities or private companies, including the suspension of Syrian government participation in the Euro-Med regional cooperation initiatives and the European Investment Bank’s loans to Damascus. The most onerous measures -- by amount of lost revenue -- are the import bans on crude oil and petroleum products. The EU has also halted investment in the oil industry and construction of electrical power plants in Syria, and stopped supplying the Syrian Central Bank with banknotes and coins, which had previously been minted in Austria.

One impact of the sanctions, according to Jihad Yazigi, editor of The Syria Report, is that they seem to have accelerated the depletion of Syria’s foreign exchange reserves. The government has drawn heavily upon these stores of cash as the oil revenue dried up. According to the SCPR report mentioned above, the sanctions caused 28 percent (or roughly $6.8 billion) of the losses to GDP in 2011 and 2012. The economists conclude that sanctions have had the worst impact on the lower social classes, given the rise in prices of food staples such as bread and the higher cost of heating oil. Over the past year, a war economy has developed, replete with smuggling, some of which is carried out by the security forces themselves.

Unlike in Saddam Hussein’s Iraq, the sanctions are not UN-mandated and the great powers have not imposed a no-fly zone. Syria has maintained strong economic relations with other countries. Taken together with an extensive degree of self-sufficiency in food production, a strategy launched under Asad the father, the trade means that Syria has been able to escape the worst repercussions that sanctions can have.

There is, however, another dimension to sanctions that their proponents forget or dismiss. Sanctions are political tools, intended to alter the target government’s policies or to induce its popular overthrow. Once sanctions are in place, their justification may be modified. The CIA believes that Syria has the world’s fourth-largest store of chemical weapons. In August 2012, President Obama issued stern warnings to the Syrian regime not to deploy this alleged arsenal against the rebels. In the event of the regime’s fall, sanctions could find a new lease on life as a way to compel the successor Syrian government to secure or destroy the suspected stockpiles.

It is not clear when the fighting will end or when post-conflict recovery will begin. But the recovery will need to address both immediate humanitarian concerns and the plight of refugees and internally displaced. Yazigi argues that the resilience of the Syrian economy is due to its diversity -- its reliance on manufacturing, agriculture and the service sector, including tourism -- something reconstruction must also take into account. It will be a tall order, given a destroyed economy, dwindling oil resources and foreign exchange reserves that may be near exhaustion. The process of reconstruction is fraught with other dangers, as the experiences of Iraq and Lebanon demonstrate. It is worth noting that the damage is highly uneven -- there are cities like Tartous that are almost unaffected, while others are completely destroyed. Moreover, large industrial establishments, power plants and major ports appear to be relatively unscathed, so far.

There are pockets of hope, mostly at the grassroots level. Not least of these is the wide variety of local and regional networks that have taken up the task of economic and political organization, as well as anti-sectarian initiatives, in the midst of chaos. There are experiments in direct democracy facilitated by the local coordination councils that are worth examining and supporting. Several activists and doctors from international relief organizations have separately recounted to me tales of the advanced expertise among the Syrian doctors who have set up field hospitals under the most extreme conditions. Organizing for a future Syria must not wait until the deadly stalemate ends.